By John McCrank
NEW YORK (Reuters) – Arthur Levitt, a former chairman of the U.S. Securities and Exchange Commission, said on Thursday he believed the regulator was ill equipped to deal with bitcoin, the digital currency that has seen a meteoric price rise, prompting concerns of a bubble.
“I think the tendency of the Commission has been to stay away from bitcoin,” Levitt said at The Economist’s Finance Disrupted conference in New York.
“They have too many other issues that they are dealing with now that they don’t want to take on something as complex from a regulatory point of view as bitcoin is,” said the SEC’s longest-serving chairman, who held the post from 1993 to 2001.
Digital currencies can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government.
Levitt’s comments came a day after Grayscale Investments LLC said Intercontinental Exchange Inc’s NYSE Arca exchange withdrew a request with the SEC to list its Bitcoin Investment Trust.
Grayscale, the fund’s issuer, noted that earlier this year, the SEC rejected two similar applications for exchange listings of digital currency products.
“Although digital currency market regulation continues to rapidly evolve, at this time Grayscale does not believe there have been enough regulatory developments to prompt the SEC to approve the … application,” Grayscale said in a statement.
The Bitcoin Investment Trust is currently traded “over the counter,” in less formal, more lightly regulated exchanges than those used for typical stock transactions.
Shares of the trust are trading up 508 percent this year.
The price of bitcoin itself has more than quadrupled in value since December to more than $4,100, prompting Jamie Dimon, the head of JPMorgan Chase & Co, to compare it to the famous tulip market bubble in the Netherlands in the early 1600s.
“It could be at $20,000 before this happens, but it will eventually blow up,” he said earlier this month.
There have also been a number of massive cybersecurity breaches affecting digital currency holders.
Levitt said the Commission, which says its mission “is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation,” clearly should be prepared to regulate bitcoin.
Another factor is that the SEC does not want to get into a battle with state regulators, which have taken the lead on regulating bitcoin, said Levitt.
(Editing by Bernadette Baum)